Critical Review: Under Armour (NYSE:UA) & Culp (NYSE:CULP)

Culp (NYSE:CULP) and Under Armour (NYSE:UA) are both small-cap consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitability.

Institutional & Insider Ownership

75.1% of Culp shares are held by institutional investors. Comparatively, 36.3% of Under Armour shares are held by institutional investors. 7.9% of Culp shares are held by company insiders. Comparatively, 15.6% of Under Armour shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Culp and Under Armour’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Culp	-5.24%	-12.53%	-5.70%
Under Armour	-9.99%	4.04%	1.37%

Earnings and Valuation

This table compares Culp and Under Armour”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Culp	$206.76 million	0.24	-$19.10 million	($0.32)	-12.16
Under Armour	$4.97 billion	0.40	-$495.64 million	($1.15)	-3.99

Culp has higher earnings, but lower revenue than Under Armour. Culp is trading at a lower price-to-earnings ratio than Under Armour, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Culp has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500. Comparatively, Under Armour has a beta of 1.53, meaning that its share price is 53% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Culp and Under Armour, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Culp	1	1	0	0	1.50
Under Armour	2	1	0	0	1.33

Under Armour has a consensus price target of $5.50, suggesting a potential upside of 19.96%. Given Under Armour’s higher possible upside, analysts clearly believe Under Armour is more favorable than Culp.

Summary

Under Armour beats Culp on 8 of the 13 factors compared between the two stocks.

About Culp

Culp, Inc. manufactures, sources, markets, and sells mattress fabrics, sewn covers, and cut and sewn kits for use in mattresses, foundations, and other bedding products in the United States, North America, the Far East, Asia, and internationally. It operates in two segments, Mattress Fabrics and Upholstery Fabrics. The Mattress Fabrics segment offers woven jacquard, knitted, and converted fabrics for use in the production of bedding products, including mattresses, box springs, foundations, and top of bed components. The Upholstery Fabrics segment provides jacquard woven fabrics, velvets, micro denier suedes, woven dobbies, knitted fabrics, piece-dyed woven products, and polyurethane fabrics for use in the production of residential and commercial upholstered furniture, such as sofas, recliners, loveseats, chairs, sectionals, and sofa-beds, as well as office seating and window treatment products; and installation services for customers in the hospitality and commercial industries. Culp, Inc. was incorporated in 1972 and is headquartered in High Point, North Carolina.

About Under Armour

Under Armour, Inc., together with its subsidiaries, develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth. The company provides its apparel in compression, fitted, and loose fit types. It also offers footwear products for running, training, basketball, cleated sports, recovery, and outdoor applications. In addition, the company provides accessories, which include gloves, bags, headwear, and sports masks; and digital subscription, advertising, and other digital business services. It primarily offers its products under the UNDER ARMOUR, HEATGEAR, COLDGEAR, HOVR, UA, PROTECT THIS HOUSE, I WILL, UA Logo, ARMOUR FLEECE, and ARMOUR BRA brands. The company sells its products through wholesale channels, including national and regional sporting goods chains, independent and specialty retailers, department store chains, mono-branded Under Armour retail stores, institutional athletic departments, and leagues and teams, as well as independent distributors; and directly to consumers through a network of 439 Brand and Factory House stores, as well as through e-commerce websites. It operates in the United States, Canada, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. Under Armour, Inc. was incorporated in 1996 and is headquartered in Baltimore, Maryland.